Petition for Review of a Decision of the District of Columbia Department of Employment Services

Argued March 9, 2000

A subsection of the Workers' Compensation Act of 1979 that was repealed in 1999 provided that a disabled employee's workers' compensation benefits were subject to reduction if the employee received payments "from employee benefit plans subject to [ERISA] and such income maintenance plans solely funded by the employer." D.C. Code § 36-308 (9) (1997). *fn1 The Department of Employment Services (DOES) construed the quoted language to mean that workers' compensation benefits could be reduced on account of payments from an employee benefit plan subject to ERISA only if that plan was solely funded by the employer. DOES accordingly held in the present case that intervenor Ira Scott's receipt of payments from his union pension fund did not reduce the workers' compensation benefits to which he was entitled, because the union pension plan - an employee benefit plan subject to ERISA - was not solely funded by Scott's employer, petitioner Mushroom Transportation. On appeal to this court, Mushroom Transportation and its insurer ask us to reject DOES's construction of former D.C. Code § 36-308 (9) and hold instead that the statute authorized a reduction in benefits if the employee receives money from an employee benefit plan subject to ERISA whether or not the plan was funded solely by the employer. Under petitioners' proposed construction of the statute, Scott's workers' compensation benefits would have to be reduced on account of his union pension.

This is the second time that this dispute is before us. In the first appeal, we found D.C. Code § 36-308 (9) to be ambiguous, and we remanded the case to DOES for an authoritative interpretation of the provision. See Mushroom Transp. v. District of Columbia Dep't. of Employment Servs., 698 A.2d 430 (D.C. 1997) ("Mushroom I"). On this appeal, we are satisfied that on remand the Director of DOES conducted the analysis we required and adopted a reasonable construction of § 36-308 (9). Because this court defers to an administrative agency's interpretation of the statute that it administers if that interpretation is a reasonable one in light of the language of the statute and its legislative history, we affirm the Director's decision in this case.

Factual Summary and Procedural History

Ira Scott worked as a truck driver for Mushroom Transportation for three years. Scott sustained a back injury in the course of his employment, and he was eventually awarded permanent total disability benefits under the Workers' Compensation Act. Mushroom began paying him weekly benefits in accordance with the award in 1990.

As a member of Teamster's Union Local 639 for over 27 years, Scott had made regular payments to the union for dues and pension benefits. When Mushroom learned in 1992 that Scott had begun receiving his union pension, it petitioned DOES to reduce Scott's workers' compensation benefits pursuant to D.C. Code § 36-308 (9). Mushroom also sought an overpayment credit of $53,000, to be charged against future payments due to Scott.

A hearing examiner denied Mushroom's petition on the ground that the union pension plan was not solely funded by the employer but rather had been funded by Scott himself. Mushroom appealed the examiner's ruling directly to this court, bypassing review by the Director of DOES pursuant to D.C. Code § 36-322 (b).

That first appeal resulted in Mushroom I, where we found the operative language of D.C. Code § 36-308 (9) to be ambiguous. Mushroom I, 698 A.2d at 431. Although our opinion acknowledged the general rule that DOES's interpretation of the Workers' Compensation Act is binding on this court so long as it is reasonable and does not conflict with the plain meaning of the statute or its legislative history, we concluded that we could not defer to the hearing examiner's interpretation of § 36-308 (9) for three reasons. First, the Director of DOES had not passed on the statutory interpretation question. See id. at 432-33. Second, in construing § 36-308 (9) as she did, the examiner relied on the decision of the Director in Shaner v. W.A. Chester, Inc., Dir. Dkt. No. 89-62, H&AS No. 89-140, OWC No. 5433 (April 12, 1993). That case, however, addressed a different issue - the meaning of the statutory phrase "solely funded by the employer," not whether that phrase modified "employee benefit plans." Shaner was not controlling on the latter issue "[b]ecause the Director in Shaner was not asked, and therefore did not decide, whether the statutory provision should be interpreted in the way the hearing examiner has construed the provision here." Mushroom I, 698 A.2d at 433. Third, apart from her misplaced reliance on Shaner, the examiner did not conduct "any analysis of the language, structure, or purpose of the statutory provision." Id. We remanded the case to permit the Director to make "an authoritative interpretation" of § 36-308 (9) "in light of the language of the statute, its legislative history, and DOES precedent." Id. at 431. In particular, our opinion suggested that the Director weigh the significance of the following sentence in the legislative history of the Workers' Compensation Act:

The Bill provides that compensation benefits are to be reduced if the total amount of money received from Worker's Compensation benefits, from social security, and from employee benefit plans, and from employer-funded income maintenance plans, taken as a whole, exceed 80% of the employee's average weekly wage or total of federal payments received by the employee. Committee on Housing and Economic Development, Report on the District of Columbia Workers' Compensation Act of 1979, Bill 3-106, at 12 (Jan. 29, 1980) (emphasis added).

We noted that the distinction in this sentence between "employee benefit plans" and "employer-funded income maintenance plans" supported Mushroom's contention that § 36-308 (9) authorized a reduction in workers' compensation benefits on account of an employee benefit plan such as a union pension even if the plan was not employer-funded. Mushroom I, 698 A.2d at 434. We did not, however, consider this single sentence in a committee report to be dispositive, in and of itself, of the interpretive question posed by the ambiguous language of § 36-308 (9).

On remand the Director of DOES undertook the analysis of the statute that Mushroom I requested, and he construed § 36-308 (9) to permit reduction of benefits on account of payments from an employee benefit plan only if the plan was solely funded by the employer. See Scott v. Mushroom Transp., Dir. Dkt. No. 95-38, H&AS No. 88-44A, OWC No. 74896, 1998 D.C. Wrk. Comp. Lexis 483 (Aug. 17, 1998). The Director considered the sentence in the committee report that Mushroom I cited but found it inconclusive. The Director also found that "further review of the legislative history does not shed any more light on the meaning of this statutory provision." Id. at 4. In the absence of clear guidance in the legislative history, the Director stressed that his interpretation of § 36-308 (9) would be informed by "the general rule . . . that concerning private pension plans, `whether provided by the employer, union or the individual's own purchase, there is ordinarily no occasion for reduction of compensation benefits.'" Id. at 4 (citing 9 A. Larson, The Law of Workman's Compensation, § 97.51(a) (1998)). Examining the language of § 36-308 (9) itself "against th[e] background" of that general rule, the Director concluded that the structure and wording of the statute indicated that the phrase "solely funded by the employer" qualified ERISA "employee benefit plans" as well as "such income maintenance plans." Id. The Director reasoned that "[i]f it was the Council of the District of Columbia's intention not to treat the plans the same, it seems that the provision would have been drafted to read, `(3) from employee benefit plans subject to [ERISA]; and (4) from income maintenance plans solely funded by the employer. . . .'" Id. at 5. The Director thought that the Council's use of the word "such" also indicated a connection between "income maintenance plans" and the preceding term "employee benefit plans" so that it made sense to think that both terms were modified by the phrase "solely funded by the employer." Id. The logic and reasonableness of this construction of the statute were, the Director concluded, illustrated by the facts of the present case:

In this case, claimant himself, other union workers and all former employers claimant worked for, made payments into the fund for 27 (twenty seven) years. In comparison, employer in this case only paid into the fund for less than 3 (three) years. Thus, an overwhelming majority of the payments that were made ...

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